You've probably got the answers already, but I'm going crossed trying to read all replies (got a cold & sneezing) so will add my 2 penneth anyway :0
1, Yes Victoria Sponge will be fine, but Madeira or another more dense cake would be better still - but do "seal it" with a layer of jam, butter ice, honey or some other sweet stickiness that suits the flavour you want & your DCs like - this will help stop the regal icing from drying out & will help the icing stick - Doubt it will last long enough at a kids party to worry to much about drying out anyway
2, Use your rolling pin to lift icing into place & drop over the cake - make sure its bigger than our cake AND depth of sides - don't worry if not quite there, use palette type knife into place.
- have a mug of red hot water standing by & dip this knife into it & use to smooth away flaws in the cake - you can also buy icing polishers/smoothers which are a great gadget to have if you do this often :)see here
4.Use a tooth pick or cocktail stick to pick up & mix up your icing colours - little at a time, easier to add than take out
- you can make shapes in advance - if they are finished, you can let them dry & don't worry - if not layer with grease proof paper
- Sterilised Kids Clay Modelling tools are great for modelling icing, as do any suitable play doh moulds etc.
- Using a bun tray as a palette, you can mix up coloured icing paints - drop of colour & mix in icing sugar until you get a paint like paste & then use as you would paint.
- Icing Sugar & water whipped into in a thick paste makes great icing glue - or use the writing icing.
- use freezer bags with the corner nipped off, filled with colour icing to line any piping bags - just whip out when you want to change colour - no bag to wash & dry out, just swap or wash nozzle.
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don't worry about the mess on your cake board - when your done use strong kitchen roll & hot water to mop it away - keep changing kitchen roll to avoid just pushing it around.
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& top tip if all else fails - a liberal sprinkling of fine edible glitter - self colour best for boys- hides a multitude of cracks & fingerprints 
Butter Cream would taste far better with that sort of sponge cake - personally I think regalice only really works with rich fruitcake - a good tutorial here if you fancy that instead - Even better add white chocolate to your icing - it colours too & make your cake a rich choc one :)
Smooth topped buttercream icing tutorial
hope thats of some use :)